Company begins transition to operating unit structure: Enterprise Services, Messaging, QNX Embedded business and the Devices business

New organizational structure to drive greater focus on services and software, while establishing a more efficient business model for the Devices business — Enterprise Services: Company sees increasing penetration of BlackBerry Enterprise Service 10 (BES10) with over 30,000 commercial and test servers installed to date, up from 25,000 in September 2013; Company remains a mobile device management leader with global enterprise customer base exceeding 80,000

Messaging: Over 40 million newly registered iOS/Android users in the last 60 days; more than a dozen Android OEMs to preload BBM, including most recently LG; over 250,000 BBM Channels created by global user base since launch of BBM Channels on BlackBerry, including large brands such as Coke Indonesia and USA Today; BBM is the most secure mobile messaging service for use in regulated enterprises

QNX Embedded Business: QNX to unveil new technology in automotive and cloud services at the 2014 International Consumer Electronics Show in January

Devices: Company strikes joint device development and manufacturing agreement with Foxconn; initial focus of partnership to be development of a consumer smartphone for Indonesia and other fast-growing markets in early 2014

Revenue for the third quarter of approximately $1.2 billion, compared to $1.6 billion in the previous quarter; Company recognizes revenue on approximately 1.9 million smartphones in the third quarter, compared to 3.7 million smartphones in the previous quarter

Company takes primarily non-cash, pre-tax charges of $4.6 billion associated with long-lived assets, inventory and supply commitments, and previously announced restructuring and strategic review process; GAAP loss from continuing operations of $4.4 billion, or $8.37 per share diluted, compared with a GAAP loss from continuing operations of $965 million, or $1.84 per share diluted, in the prior quarter

Adjusted loss from continuing operations for the third quarter, excluding charges, was $354 million, or $0.67 per share diluted, compared with adjusted loss from continuing operations of $248 million, or $0.47 per share diluted, in the prior quarter –

Cash and investments balance of $3.2 billion; cash used in operations of $77 million

Q3 Results

Revenue for the third quarter of fiscal 2014 was approximately $1.2 billion, down $380 million or 24% from approximately $1.6 billion in the previous quarter and down 56% from $2.7 billion in the same quarter of fiscal 2013. The revenue breakdown for the quarter was approximately 40% for hardware, 53% for services and 7% for software and other revenue. During the third quarter, the Company recognized hardware revenue on approximately 1.9 million BlackBerry smartphones compared to approximately 3.7 million BlackBerry smartphones in the previous quarter. Most of the units recognized were BlackBerry 7 devices. During the quarter, approximately 4.3 million BlackBerry smartphones were sold through to end customers, which included shipments made and recognized prior to the third quarter and which reduced the Company’s inventory in channel. Of the BlackBerry smartphones sold through to end customers in the third quarter, approximately 3.2 million were BlackBerry 7 devices.

GAAP loss from continuing operations for the quarter was $4.4 billion, or $8.37 per share diluted. The loss includes a non-cash, pre-tax charge against long-lived assets of approximately $2.7 billion (the “LLA Impairment Charge”), a primarily non-cash, pre-tax charge against inventory and supply commitments of approximately $1.6 billion (the “Q3 14 Inventory Charge”), and pre-tax restructuring, legal and financial advisory charges of approximately $266 million related to the Cost Optimization and Resource Efficiency (“CORE”) program and the strategic review process. This compares with a GAAP loss from continuing operations of $965 million, or $1.84 per share diluted in the prior quarter, and GAAP income from continuing operations of $14 million, or $0.03 per share diluted, in the same quarter last year.

Adjusted loss from continuing operations for the third quarter was $354 million, or $0.67 per share diluted. Adjusted loss from continuing operations and adjusted diluted loss per share exclude the impact of the LLA Impairment Charge of approximately $2.7 billion ($2.5 billion after tax), the Q3 14 Inventory Charge of approximately $1.6 billion ($1.3 billion after tax) and pre-tax restructuring and legal and financial advisory charges of approximately $266 million ($225 million after tax) related to the CORE program and strategic review process incurred in the third quarter of fiscal 2014. These impacts on GAAP loss from continuing operations and diluted loss per share from continuing operations are summarized in the table below.

The total of cash, cash equivalents, short-term and long-term investments was $3.2 billion as of November 30, 2013, compared to $2.6 billion at the end of the previous quarter. Cash flow used in operations in the third quarter was approximately $77 million. Cash flows provided by financing activities in the third quarter were approximately $991 million, including the proceeds from the issuance of debt. Uses of cash included intangible asset additions of approximately $234 million and capital expenditures of approximately $46 million. Purchase obligations and commitments amounted to approximately $2.1 billion as at November 30, 2013, with purchase orders with contract manufacturers representing approximately $664 million of the total.

“With the operational and organizational changes we have announced, BlackBerry has established a clear roadmap that will allow it to target a return to improved financial performance in the coming year,” said John Chen, Executive Chairman and Chief Executive Officer of BlackBerry. “While our Enterprise Services, Messaging and QNX Embedded businesses are already well-positioned to compete in their markets, the most immediate challenge for the Company is how to transition the Devices operations to a more profitable business model.”

Chen added: “We have accomplished a lot in the past 45 days, but still have significant work ahead of us as we target improved financial performance next year. However, the Company is financially strong, has a broad and trusted product portfolio to work with, a talented employee base and a new leadership team dedicated to implementing our new roadmap.”

BlackBerry Announces Five-Year Strategic Partnership with Foxconn

The Company announced today that it has entered into a five-year strategic partnership with Foxconn, the world’s largest manufacturer of electronic products and components. Under this new relationship, Foxconn will jointly develop and manufacture certain new BlackBerry devices and manage the inventory associated with those devices. The initial focus of the partnership will be a smartphone for Indonesia and other fast-growing markets targeting early 2014.

“This partnership demonstrates BlackBerry’s commitment to the device market for the long-term and our determination to remain the innovation leader in secure end-to-end mobile solutions,” said Chen. “Partnering with Foxconn allows BlackBerry to focus on what we do best – iconic design, world-class security, software development and enterprise mobility management – while simultaneously addressing fast-growing markets leveraging Foxconn’s scale and efficiency that will allow us to compete more effectively.”

BlackBerry will own all of its intellectual property and perform product assurance on devices through the Foxconn partnership, as it does currently with all third-party manufacturers.

“BlackBerry is an iconic brand with great technology and a loyal international fan base,” said Terry Gou, Founder and Chairman, Foxconn. “We are pleased to be working with BlackBerry as it positions itself for future growth and we look forward to a successful strategic partnership in which Foxconn will jointly develop and manufacture new BlackBerry devices in both Indonesia and Mexico for new and existing markets.”

BlackBerry will focus heavily, via internal development, on market segments where its continuous innovations in secure hardware, software and services remain critical and integral to enterprise and government customers. BlackBerry also intends to drive adoption of its multi-platform BBM, deliver real-time, reliable and secure messaging through its Network Operations Center (NOC), and grow its enterprise mobility and mobile device management business through on-premise and cloud-based solutions for cross-platform devices as well as its own.

Outlook

In the fourth quarter, the Company anticipates maintaining its strong cash position and further reducing operating expenses as it continues to implement its previously-announced cost reduction program.

Note: Adjusted gross margin, adjusted gross margin percentage, adjusted loss from continuing operations before tax, adjusted loss from continuing operations and adjusted diluted loss per share from continuing operations do not have a standardized meaning prescribed by GAAP and thus are not comparable to similarly titled measures presented by other issuers. The Company believes that the presentation of these non-GAAP measures enables the Company and its shareholders to better assess the Company’s operating results relative to its operating results in prior periods and improves the comparability of the information presented. Investors should consider these non-GAAP measures in the context of the Company’s GAAP results.

(1) During the third quarter of fiscal 2014, the Company reported GAAP gross margin of $(1.3) billion or (106%) of revenue. Excluding the impact of the Q3 14 Inventory Charge and CORE charges included in cost of sales, the adjusted gross margin was $404 million, or 34%.

(2) As part of the Company’s ongoing effort to streamline its operations and increase efficiency, the Company commenced the CORE program in March 2012. Further, the Company announced the formation of a special committee to conduct an organizational strategic review on August 12, 2013. During the third quarter of fiscal 2014, the Company incurred charges related to the CORE program and strategic review process of approximately $266 million pre-tax, or $225 million after tax. Substantially all of the pre-tax charges are related to one-time employee termination benefits, facilities and manufacturing costs related to the CORE program and legal and financial advisory costs related to the strategic review process. During the third quarter of fiscal 2014, charges of approximately $76 million were included in cost of sales, charges of approximately $37 million were included in research and development and charges of approximately $153 million were included in selling, marketing, and administration expenses.

(3) During the third quarter of fiscal 2014 the Company performed a long- lived asset impairment test and based on the results of that test, the Company recorded a non-cash LLA Impairment Charge of approximately $2.7 billion pre-tax, or $2.5 billion after tax. (4) During the third quarter of fiscal 2014, the Company recorded a primarily non-cash, pre-tax charge against inventory and supply commitments of approximately $1.6 billion, or $1.3 billion after tax, which is primarily attributable to BlackBerry 10 devices.

A conference call and live webcast will be held beginning at 8 am ET, which can be accessed by dialing 1-800-814-4859 or through your BlackBerry® 10 smartphone, personal computer or BlackBerry® PlayBook™ tablet at http://ca.blackberry.com/company/investors/events.html. A replay of the conference call will also be available at approximately 10 am by dialing (+1)416-640-1917 and entering pass code 4612570# or by clicking the link above on your BlackBerry® 10 smartphone, personal computer or BlackBerry® PlayBook™ tablet. This replay will be available until midnight ET January 3, 2014.